The Modern Silk Roads

‘From the beginning of time, the centre of Asia was where empires were made’.¹ Long before ocean routes dominated global trade, these overland arteries dictated the fate of empires. Frankopan mapped this expanse as a living network, showing that global power has always followed the conduits carrying valuable resources and ideas across Eurasia.² Today, the route has reawakened, not around luxury commodities, but around raw industrial power. The new Eurasian arteries are defined by the flow of rare earths and critical minerals and the energy grids built to sustain frontier computational infrastructure. The contest for supremacy is no longer about silk or silver, but about who controls the physical chokepoints of energy, metals and data.

This new Silk Road is volatile, contested and deeply illiquid. Prices swing wildly, superpowers clash over essential tech components and billions in infrastructure end up trapped in unstable regions. Building processing plants, power grids and data cables takes massive upfront money and years to turn a profit. Hence, building the infrastructure needed proves tricky. Bound by Basel IV constraints, commercial lenders cannot fund them as the strict lending rules make frontier jurisdictions, political instability and wild commodity price swings too risky to touch.³ Private markets cannot solve the problem alone either as when they are exposed to unpredictable spot markets and predatory price-dumping by dominant producers, these projects fail basic risk tests required by institutional investors. 

To break this deadlock, governments are rewriting the rules of industrial finance. Instead of relying on passive grants, states are stepping directly into deals as equity co-owners, lenders and price guarantors. By contractually absorbing price crashes and demand risk, sovereign balance sheets turn high-risk border corridors into predictable, bankable assets, unlocking the private credit and infrastructure capital needed to build them. 

The Belt and Road Initiative

To understand why Western states are gradually stepping into private market deals, one must look at the blueprint China perfected over the last decade. Widely characterised as a modern Silk Road, the Belt and Road initiative splits into two distinct components, an overland continental network (‘belt’) and maritime sea routes (‘road’). Covering dozens of nations across Southeast Asia, Central Asia, Africa and Europe, it encompasses roughly half the world’s population and a quarter of global GDP. ⁴

At its core, the BRI is a transcontinental infrastructure network designed to reshape global trade around Beijing. The historical parallel is deliberate, evoking an era when China was the world’s preeminent economic power, whilst deliberately cutting Washington out of the frame. To execute this vision, Beijing bypassed traditional multilateral lenders, deploying state policy giants like China Development Bank and the Export/Import Bank of China to bankroll the ports, rail lines, mines and power grids connecting Eurasia.⁵

Between 2008 and 2021 alone, these two institutions committed nearly $498 billion to overseas projects. While the BRI was not officially unveiled until 2013, the financing apparatus behind it was already well established. In the aftermath of the 2008 global financial crisis, Beijing unleashed massive domestic stimulus and hence, the resulting  capital overflow quickly spilled outward into international development. Physical connectivity took clear priority with transport and power grids capturing around $202 billion or roughly 65% of China’s official overseas lending.⁵

Through the Belt and Road Initiative, Beijing did not just build transit routes, it locked down the vital refining and processing facilities connecting them. That control gave China massive power over market prices. Whenever independent competitors tried to launch outside China’s BRI orbit, Chinese firms could undercut them by flooding the market with cheap supply, forcing prices below what private rivals could afford to survive on. Unprotected private builders and banks took the hit and folded, keeping Beijing’s supply lines secure. 

Realising that private markets alone could not beat the state-backed power of the BRI, western governments have changed tactics. Leaving critical minerals and supply routes to private risk had failed. Allied governments are stepping in with public funds to absorb initial losses and guarantee price floors, making high-risk frontier infrastructure safe enough for private investors to back. 

De-risking the chokepoints

The clearest break from the old model is how this public money is actually arriving. Instead of issuing passive grants, Western policymakers have started writing equity checks and structuring project debt just like private investors.

To secure critical minerals, Washington is moving past traditional grants and acting as a commercial banker. In July 2025, the defence department provided a $150 million loan and took a $400 million equity stake in domestic rare earths producer MP Materials. Alongside extending price guarantees to MP Materials, Washington also extended guarantees to Lynas Rare Earths and an MP Materials joint venture with Saudi miner Maaden, while the International Development Finance Corporation deployed another $1.2 billion in equity financing for mineral projects in 2026.⁶

Since 2022, the US has lined up around $40 billion in conditional funding for mining projects and bought stakes in domestic miners. Abroad, American officials are helping US firms win mining rights in countries like Kenya and DRC. Washington is also trying to build a non-Chinese supply alliance called Forge (Forum on Resource Geostrategic Engagement) though the EU has been slower to commit to the preferential trade bloc and price floors at its centre.⁷

Meanwhile, Europe is struggling to keep pace with the United States in breaking China’s grip on critical raw materials needed for clean energy and defence. Although Brussels has fast-tracked approvals for dozens of key supply initiatives and rallied roughly €6 billion alongside member states this year, industry leaders caution that European support remains too sluggish to ignite the domestic sector.⁷

Yet funding mines and processing plants only solves half the puzzle. Refining minerals and running modern computing networks both require vast amounts of cheap, reliable power, far more than Western grids can easily supply. To make these projects work as a real trade corridor, Western governments are looking outward.

The contested corridors

To turn strategy into physical reality, Western capital was forced abroad. Both mineral refining and computational networks hit the exact same barrier: they require cheap, abundant, and continuous power. To make these supply chains viable, an alliance has formed between Western price guarantees, Gulf capital, and Central Asian transit routes.

At the centre is the Middle Corridor, spanning Kazakhstan, Azerbaijan, and Georgia to reach Europe. It is a shared, contested vein: China uses it to push manufactured goods westward, while Western and Gulf investors move in reverse, racing to secure critical minerals before Beijing locks them down. For Central Asian states, this rivalry offers rare leverage, allowing them to mandate that foreign backers build domestic refineries, energy grids, and transcontinental lines etc.

The scramble for this corridor stems from an acute lack of alternatives:

• The Northern Route across Russia has been effectively choked off by Western sanctions.⁸

• The Southern Maritime Route through the Suez Canal and Red Sea faces constant missile strikes and chokepoint blockades.⁸

• The North-South Corridor through Iran remains isolated, built exclusively by and for sanctioned states.⁸

This leaves the Middle Corridor as the sole viable overland bridge. Keeping it open, however, carries risks private balance sheets cannot bear, forcing allied governments to underwrite the frontier and transform national security into an enduring new asset class.

The price of the pass

Global power has always followed the trade routes running through Eurasia. In the past, empires defended these paths with forts and armies. Today, superpowers defend them with government balance sheets.

Relying on the free market to secure these routes failed. Private banks cannot take the risk of building in unstable regions, and private companies cannot survive when rivals crash prices. To keep essential minerals, energy lines, and data networks open, governments had to change how projects get funded.

By offering price guarantees, cheap loans, and direct investments, states now take on the initial losses. This shifts the risk from private investors to the public. In return, private funds get the steady, reliable returns they need to finally step in and build. In the modern contest over global trade, power belongs to the states that can use public money to make high-risk frontier corridors safe for private capital.